CHART OF THE DAY: The College Bubble Has Popped

With the
cost of tuition exploding higher, student loan delinquency
rates on the rise, and wages for college grads going nowhere,
young people are increasingly asking themselves if higher
education is really worth it.

While it's true that the
unemployment rate is lower for the those with college
degrees, data shows that labor market conditions are rapidly
deteriorating for this demographic.

Yesterday, we reported on a new eye-opening
report from Goldman Sachs' Jan Hatzius who noted that the
labor force participation rate for college-grads was
tumbling. This has been giving the appearence that the
unemployment rate has been relatively stable.

Hatzius took the employment rate as a percentage of the
population for college grads and then for those with less than a
high school diploma. This provided a picture of the
employment rate without having to address the changes in labor
force participation rate.

"The statement that college graduates are the only group to have
seen employment gains also requires qualification," said Hatzius.
"It is technically correct, but nevertheless misleading. As shown
in Exhibit 3, the employment/population ratio has fallen just as
sharply among college graduates as among high school dropouts
since 2007; in other words, the growth in the absolute number of
employed college graduates has been nowhere near enough to offset
the increase in the size of the college-educated population."

While Hatzius is mainly concerned with trends since 2007, the
chart he provided goes farther back.

As you can see since the early 1990's, the employment rate for
college graduates has been tumbling while the employment rate for
those with less than a high school diploma has trended higher.